Russian Economic Reform: a History of Concepts’ Evolution

Abstract

Ruslan Khaitkulov — Assistant, Faculty of Economic Methodology and History, National Research University “Higher School of Economics”. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation. E-mail: khaitkulovhse@gmail.com

Daniil Shestakov — Postgraduate Student, Faculty of Economics, National Research University “Higher School of Economics”. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation. E-mail: dschestakov@gmail.com

The history of how the concepts of Russian economic reform evolved has not been a popular research subject until recently. What we attempted in this article was to test the hypothesis according to which the main factor of evolution was the replacement of different groups of reformers rather than their theoretical considerations. We reconstruct the chronology of Russian reform (1985-1998) and look into the key points of the process and the factors which affected the evolution of concepts, and further assess their relative importance and the nature of their influence. In our study, we rely on such sources of information as personal attempts to reconstruct the logic of events by L. Grigoryev, A. Aganbegyan, S. Glazyev, Y. Urinson, G. Yavlinsky and some others — participants in a special workshop on Theories and Practices of Economic Reform in USSR and Russia. The workshop was organized by the economics department of the National Research University “Higher School of Economics”.

The “improvement of socialism” and “acceleration” of the Soviet economy were the dominant ideas from 1985-86. The agenda of 1987-1988 included the “renovation of socialism” and the gradual movement towards market socialism. It was also the time when the first voices to deny the socialist basis of the new economy actually spoke up. In 1990-91, the economic problems caused the immediate radicalization of reformers and the focus of their discussions quickly shifted towards the inevitability of a transformation from a planned economy to a market system. This period may be characterized as a ‘competition of programs’, although both competing programs implied the liberalization of the economy and privatization. The major difference between them was the tempo and methods of change rather than the goal itself.

In 1992, Gaidar’s government launched a radical reform and liberalized prices, which was immediately followed by rapid inflation. After this moment it is rather hard to keep an accurate record of the conceptual evolution as all the public theoretical disputes were already closed by that time. The shifts in economic policy were rather attributed to the practical needs, as the economic crisis was deepening and the social pressure was rising. We have not found any decisive changes in the declared goals of reformers, rather their main concern during this period was to stabilize the situation.

Later in 1995-1996, the political circumstances became unstable, and the much-criticized campaign of large-scale privatization was launched. There were some alternative reform programs which typically included certain Keynesian or Marxist-style measures implying strong government intervention in the economy. However, B. Yeltsin won the presidential elections and the team of reformers stayed in power for another period. The economic development of Russia from 1996-98 was more of an evolutional process, since no more radical reforms were implemented during that period.

To conclude, we substantiate our initial suggestion that the main factor of the evolution of the Russian economic reform concept was the change of reformers’ teams. The first period (1985-1991) was the period of discussions and gradual radicalization of programs as the economic problems of Soviet Union deepened and the time was just being wasted. But by the end of this period, shock therapy was accepted as a general strategy. From 1992-98 this initial ideology was preserved, but the economic crisis prevented the government from consistent implementation of reforms. However, many research papers stress the influence of political factors as well, since some economic measures were apparently taken to meet the political requirements of the situation.